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Persistent link: https://www.econbiz.de/10012487229
Conventional economic policy models focus only on selected elements of the central bank balance sheet, in particular monetary liabilities and sometimes foreign reserves. The canonical model of an ""independent"" central bank assumes that it chooses money (or an interest rate), unconstrained by a...
Persistent link: https://www.econbiz.de/10014401527
A central bank is financially strong if it possesses resources sufficient to attain its fundamental policy objective(s). Once endowed with those resources, relations between government and central bank should be designed so that significant changes in central bank financial strength do not occur...
Persistent link: https://www.econbiz.de/10014401621
Central bank financial strength is positively associated with good policy performance. Financially weak central banks generate losses which undermine macroeconomic stability and call into question the credibility of their policies. In assessing central bank financial strength a careful...
Persistent link: https://www.econbiz.de/10014402002
Central banks may operate perfectly well without capital as conventionally defined. A large negative net worth, however, is likely to compromise central bank independence and interfere with its ability to attain policy objectives. If society values an independent central bank capable of...
Persistent link: https://www.econbiz.de/10014403350
The recent expansion of the balance sheet of the consolidated Federal Reserve Banks (FRB) is analyzed in an historical context. The analysis reveals that the nature of Fed involvement in U.S. financial markets has changed dramatically and its expansion is several orders of magnitude beyond what...
Persistent link: https://www.econbiz.de/10014402279